Finance Programs

Kansas was named “The Comeback State of 2019” by CNBC. Fiscal stability, workforce development, infrastructure, cost of business, business friendliness and access to capital led to a 16-point jump for Kansas in their “Top States for Business” rankings - making us the most improved state in the country.

PROMOTING EMPLOYMENT ACROSS KANSAS

Promoting Employment Across Kansas (PEAK) offers qualified companies the ability to retain 95 percent of their payroll withholding tax for five to 10 years. The number of years that the withholding tax can be retained depends on the aggregate median wage of all PEAK jobs/employees as compared to the relevant county median wage. If the aggregate median wage of the new jobs does not qualify the project for PEAK, the annual average wage of the new jobs can be used. Qualifying through the use of the average wage limits the benefits received. A PEAK application must be submitted before locating or creating PEAK-eligible jobs in Kansas.

PEAK is available for new or relocated operations in Kansas as well as operations currently in the state that are expanding.

QUALIFYING CRITERIA: 1) For-profit entities in an eligible NAICS category or for-profit entities locating a headquarters or administrative office serving an international or national region 2) Not-for-profit entities locating a new national or international headquarters in Kansas 3) Relocate or create within two years, a minimum of five (5) new jobs to non-metropolitan areas or 10 new jobs to metropolitan areas (Shawnee,

Douglas, Wyandotte, Johnson, Leavenworth and

Sedgwick counties) in Kansas 4) Pay the relocated or new PEAK jobs at least the county median wage 5) Offer “adequate” health insurance coverage and pay at least 50 percent of the premium for health insurance for full-time employees

INDUSTRIAL REVENUE BONDS

Industrial revenue bonds (IRBs) are issued by cities and counties to provide funds for credit-worthy companies to purchase land, pay the cost to construct and equip new facilities or to purchase, remodel or expand existing facilities. IRBs allow for fixed-rate financing for the life of the bond for the project.

Industrial revenue bonds allow the construction of real property to be eligible for property tax abatement in Kansas by a local governing body. Kansas law allows for a maximum 10-year real property tax abatement commencing the year after the bonds are issued.

Another benefit of IRBs is a state and local sales tax exemption on the cost of building materials and labor, as well as fixed items of machinery and equipment.

Learn more at kansascommerce.gov/irb.

The Small Cities Community Development Block Grant – Economic Development (CDBG-ED) program is a source of financing for companies that are expanding an existing facility or starting a new operation in a non-metropolitan area of Kansas. The maximum amount of funds available is $750,000 per project. There are two parts to the program: business finance and infrastructure.

Under the business finance component, funds are available for working capital, machinery and equipment and real property. The interest rate is currently set at four percent. The term of the loan is based on the class of the asset being financed. The working capital loan has a term of five years, machinery and equipment 10 years and real property 15 years. If the project finishes by the end of the 24-month contract period without any issues, delays, etc., a 25 percent discount will be applied to the principal portion of the loan at the time of project closure. Under the infrastructure component, funding is available for water lines, sewer lines, roads, rail spurs and pre-treatment facilities. Infrastructure funding requires that 25 percent of the funds be paid back over a 10-year period at a rate of zero percent, which is done through a special assessment on the real property. In order to obtain the funds, the city or county applies on behalf of the private business. Applications are accepted from January 2 through December 4. Funding requires the creation or retention of one full-time job for up to $35,000. The maximum amount of CDBG assistance is $750,000. At least 51 percent of the jobs created or retained must meet HUD’s low- and moderate-income (LMI) test, which is based on median family income in the county in which the project is located.

Learn more at kansascommerce.gov/cdbg.

TAX INCREMENT FINANCING (TIF)

Tax Increment Financing (TIF) is a real estate redevelopment tool applicable to industrial, commercial and intermodal transportation areas and residential projects. TIF uses the increase in local taxes (property, sales, use and franchise fees) to retire the bonds sold to finance eligible redevelopment project costs.

Funds raised through TIF may be used for eligible redevelopment project costs approved by the city, such as land acquisition, site preparation, infrastructure, parking structures and other related costs. TIF cannot be used for the construction of privately owned buildings. Financing is available from TIF on a pay-as-you-go reimbursement process. The bonds are primarily secured by the incremental increase in property taxes within the redevelopment district as a result of new construction or rehabilitation but may also be general obligations of the city. TIF works for both privately and publicly owned land to be sold for redevelopment. Advance commitment by a developer to the project is essential. TIF cannot be used speculatively to prepare a site for development. TIF generally allows the financing of land acquisition and other eligible costs to be tax-free borrowing at generally lower interest costs and offers businesses the opportunity to purchase renovated sites at sub-market costs. A program with certain similarities to TIF – Sales Tax and Revenue (STAR) Bonds – was created to allow municipalities to finance tourism and entertainment attractions using state and local sales tax revenue generated by the project as a source of revenue to retire bonds issued to finance eligible project costs. In metropolitan areas, STAR Bonds can be used only for projects with anticipated capital investment of $50 million and with at least $50 million in projected gross annual sales. STAR Bond projects in rural areas have no specific financial threshold but must be of major regional or statewide significance. Generally, STAR Bond financing is used in connection with large retail projects that contain an entertainment and/or tourism destination component.

The creation of a STAR bond district requires the approval of the Secretary of Commerce.

Learn more at kansascommerce.gov/tif.

STAR BOND FINANCING

Learn more at kansascommerce.gov/starbonds.